incubator

S'porean startups to get a boost in Silicon Valley

ingaporean startups in
Silicon Valley will soon get a leg-up, if a plan by a group of
entrepreneurs and high-tech investors there to start a business incubator
bears fruit.

Conceptualised by high-tech business consultant Jek Kian Jin, Internet
investor David Lim and several other Singaporeans in the Valley, the
"grassroots-run" incubator will provide much-needed hand-holding, and even
initial funding, for startups there.

The project already has moral support from the National Science and
Computer Board, which is evaluating a proposal to fund the project. Other
Asian venture capitalists and angel investors may also be roped in for
funding. The incubator would "help Singapore startups hit the ground
running in Silicon Valley," Mr Jek told BT recently in Silicon Valley. "We
could rent maybe 3,000 sq ft of office space, so teams of startups can
have a home base for the first two months while they get settled in," he
said. "Then they can be productive in the second week or so."

Currently, new Singaporean startups in the Valley find themselves so
mired in administrative tasks that they cannot become productive for
several weeks. With things moving in "Internet time" these days, such a
delay could give competitors an advantage even before the startup begins
operations.

Singaporean startups are also limited by their lack of contacts in the
Valley. "We could get real estate agents to help them find apartments, do
administrative things such as handle their visas, incorporate the company,
help with their business plan, connect them with networks of consultants,
venture capitalists, headhunters," said Mr Jek.

"Almost everyone in Silicon Valley ... is starting incubators," says a
November Fortune magazine article. Incubators have been around for some
time, with several venture capital firms and multinationals spearheading
these in the past. The more recent Valley incubators are mostly being
started by entrepreneurs and angel investors, and many receive VC and and
angel investment themselves.

Recently, eCompanies, a Los Angeles incubator, received US$130 million
(S$219 million) in funding from investors including Disney and financier
George Soros. Last week, Internet magazine Redherring.com reported that
two other US incubators, Idealab and Divine Interventures, will go public
soon.

The difference between incubators and VCs is that while both provide
networking assistance and management direction, incubators get involved at
the earliest stages and help prepare a startup for its first VC round.

The specialised attention incubated companies receive means incubators
typically do not invest in as many companies as traditional VCs, the
Fortune article said. "But (an incubator's) success rate should be much
higher," said the article, since incubated companies tend to get to market
faster than their competitors.

The community-run Singapore incubator in Silicon Valley will likely
only take a few startups at a time, due to limited space and funding. "We
can only choose those we think are good enough to survive on their own
after the incubation period," said Mr Jek.

Depending on its funding status, the incubator may not limit its
services and investment to Singapore startups, although Singapore and
Asian startups would still be preferred.

"By working side by side with a local, American startup, the Singapore
startup will learn about doing business in the US a lot faster," said Mr
Lim. "And at the same time, the American startup will learn about
Singapore." Mr Jek declined to give more details, such as the exact cost
of the project, as discussions are still underway.

When contacted, Foo Ji Xun, the manager for the NSTB's finance and
investment division, confirmed that the NSTB had received the incubator
proposal. "There's a keen interest on our part to do something like this,
but we're still studying the viability of this concept and justifying the
economic spinoff to Singapore," he said.

Singapore also has a business centre in Silicon Valley, Gateway@SV,
which provides office facilities and business support services to
Singapore companies and startups. This is owned and marketed by Arcasia
Land, and the management sub-contracted to a US incubator organisation.
But Singapore entrepreneurs in the Valley say a private-sector,
community-driven incubator dedicated to startups might be more relevant to
their needs.